OECD Centre for Opportunity and Equality Evidence-based, policy-oriented research on inequalities Four policy avenues to reduce income inequality in OECD countries Brussels, 10 th October 2016, DG RTD Céline Thévenot OECD, Directorate for Employment, Labour and Social Affairs
Large country differences in inequality 2 Source: OECD Income Distribution Database (www.oecd.org/social/income-distribution-database.htm), Note: the Gini coefficient ranges from 0 (perfect equality) to 1 (perfect inequality). Income refers to cash disposable income adjusted for household size. Data refer to 2013 or latest year available.
Rather than continuous long-term trends, episodes of inequality increases Long-term trends in inequality of disposable income (Gini coefficient) 3 Source: OECD (2015), In It Together, http://www.oecd.org/social/in-it-together-why-less-inequality-benefits-all- 9789264235120-en.htm OECD Income Distribution Database, www.oecd.org/social/income-distribution-database.htm. Note: Income refers to disposable income adjusted for household size.
No light at the end of the tunnel Economic recovery has not reduced inequality Average annual growth of disposable income, OECD-34 1,0% 2007-2010 2010-2014 2007-2014 0,5% 0,0% -0,5% -1,0% -1,5% -2,0% -2,5% Bottom 10% Median income Top 10% 4
4 policy avenues to tackle high inequality 1 2 3 4 Promote employment and good-quality jobs Foster women s participation in economic life Strengthen quality education and skills development Improve the design of tax and benefit systems for a more efficient redistribution 5
Non-standard work contributed to job polarisation Percentage change in employment shares by task category, Mid 1990s - latest year 25 20 15 10 5 0-5 -10-15 -20 Standard Work Non-standard Work -25 Non-routine Routine Abstract 6 Source: OECD (2015), In It Together, http://www.oecd.org/social/in-it-together-why-less-inequality-benefits-all- 9789264235120-en.htm Note: Abstract occupations (ISCO88: 12-34); Routine (ISCO88: 41-42, 52, 71-74, 81-82 and 93); Non-routine manual (ISCO88: 51 83 and 91). The overall sample restricted to workers aged 15-64, excluding employers as well as students working part-time.
More women in the workforce lowers inequality Inequality would have been higher if women s employment had remained the same as 20 years ago Impact of changes in households employment patterns on Gini coefficient (mid-1980s-mid2000s) 0,050 Change in households with 0,040 female in skilled job 0,030 0,020 Change in Gini Combined wage effects 0,010 0,000-0,010-0,020-0,030-0,040-0,050-0,008-0,014 Change in households with FT, FY female worker Change in households with female worker 7 Source: Luxembourg Income Study (LIS) data
Years of schooling OECD/COPE Inequality hinders lowers social mobility Average years of schooling by parental educational background (PEB) and inequality 14 Low PEB Medium PEB High PEB 13 12 Source: OECD (2015), In It Together 11 20 25 30 35 Inequality (Gini coefficient) 8 Note: Low PEB: neither parent has attained upper secondary education; Medium PEB: at least one parent has attained secondary and postsecondary, non-tertiary education; High PEB: at least one parent has attained tertiary education. The bars indicate 95% confidence intervals.
Redistribution lowers inequality Inequality of market and disposable income, working-age population Combined impact of cash transfers and taxes Impact of cash transfers Gini at market income, before transfers and taxes 0,55 Impact of taxes Gini at disposable income, after transfers and taxes ( ) 0,50 0,45 0,40 0,35 0,30 0,25 0,20 9
Redistribution has weakened recently Inequality before and after redistribution though transfers and taxes, respectively, 2007=100, working-age population, OECD average 108 106 104 Market income inequality (before transfers and taxes) 102 Gross income inequality (after transfers and before taxes) 100 98 Disposable income inequality (after transfers and taxes) 96 2007 2008 2009 2010 2011 2012 2013 10
Designing policy packages to tackle high inequality and promote social cohesion 1 2 3 4 Promote employment and good-quality jobs Foster women s participation in economic life Strengthen quality education and skills development Improve the design of tax and benefit systems for a more efficient redistribution 11
What s next? Middle class How to prevent the middle class from sliding? Intergenerational mobility Education, health, occupation, relative poverty, wealth. Intragenerationnal income mobility Does the passage of time smooth income inequality? 12
Thank you for your attention! celine.thevenot@oecd.org www.oecd.org/social/inequality-and-poverty.htm Includes: "COMPARE YOUR INCOME" WEB TOOL @OECD_Social 13